The Real Winner in the VW Diesel Scandal? Hybrid Cars

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The Real Winner in the VW Diesel Scandal? Hybrid Cars

Then One/WIRED

Eleven million diesel-powered vehicles Volkswagen sold as high-performing, fuel-sipping, planet-coddling cars have turned out to be gross polluters masked by corporate fraud. It's bad news for the people who bought them and worse news for the company that built them. But it may well be worst of all for a technology whose reputation had improved markedly in recent years but may now be mortally wounded.

Although diesel engines have long been the workhorse of the trucking and rail industries, the automotive industry has had an on-again, off-again relationship with the technology. Oh sure, the Europeans love their diesels, in no small part because the fuel has been so heavily subsidized. Here in the states, though, the diesels that appeared during the fuel crunch of the 1970s were plagued by a reputation for being loud, slow, and smelly. They vanished almost as quickly as they appeared, but made a comeback in the past decade.

The diesels of today have been marketed as cleaner, greener and so much more fun to drive. And in many ways, they are. Diesels do deliver better fuel economy and tremendous torque. But the revelation that VW rigged its diesels to emit far less pollution during testing than real-world driving has cast a pall on the technology.

Crisis

The diesel engine is named for German inventor Rudolf Diesel, who in the 1890s developed one of the earliest working versions of the technology. It's also an internal combustion engine, but unlike a gasoline version, a diesel engine creates combustion by compressing air, then injecting fuel to ignite it—no spark plug needed. Diesel fuel is denser in energy than gasoline, but also produces more emissions, like nitrogen oxide, when burned.

Diesel's long been used for heavy duty applications like trucking and hauling trains, and is very popular in Europe for passenger cars. It's historically been unpopular among American consumers, who rightly remember GM's Oldsmobile diesels of the '70s and '80s and dirty, smelly, and loud. That's changed in recent years, largely thanks to the efforts of VW and other automakers promoting a new era of "clean diesel."

VW

Last week, the EPA accused the German automaker of using a “defeat device,” an algorithm that detects when the car is being tested by the EPA and changes its performance to meet emissions standards. The rest of the time, the cars produce up to 40 times the legal limit of nitrogen oxides (NOx), the stuff linked to increased rates of asthma and other respiratory problems. The software appears to have been installed to make sure the cars met increasingly stringent emissions regulations, without sacrificing performance or fuel economy. It would seem the technology is not so advanced as VW, which has heavily promoted its "clean diesels" and made big gains selling them in the US, said it was.

The feds say the devices were installed on 482,000 diesel-powered, four-cylinder VW Beetle, Golf, and Jetta models and the Audi A3 sold in the US between 2008 and 2015 and on VW Passat models sold between 2014 and 2015. VW has suspended sales of these models, and on Tuesday said the software was installed in 11 million vehicles worldwide. CEO Martin Winterkorn resigned the next day, and several top executives have since been fired.

The EPA demands VW recall the cars and ensure they comply with emissions standards. It remains to be seen how VW will respond, but its options range from bad to worse. A recall could cost billions on top of the $18 billion fine the EPA may levy. At least one class-action suit has been filed, and company execs could face criminal charges in the US. It isn't any better at home, either. Prosecutors in Germany are weighing an investigation, and it's anyone's guess just what will happen to the 10.5 million doctored diesels sold elsewhere.

From a cost perspective, diesel doesn’t seem like the way to go, especially as batteries get cheaper.

A (Short) Success Story

Let's not knock diesel too hard, because it offers many benefits as an alternative to gasoline. "It's a proven technology, first of all, that has on average 30 percent greater energy efficiency than a comparable gasoline engine," says Allen Schaeffer, executive director of the Diesel Technology Forum, a non-profit that works to promote the technology.

Yes, you'd expect the head of the Diesel Technology Forum to sing the tech's praises. But look at the numbers. The 2015 Chevrolet Cruze diesel gets 46 mpg on the highway, 27 in the city. The BMW 328d gets a combined 37 mpg, the 2015 Mercedes-Benz E250 Bluetec does 33. Automakers love diesels because they help them meet increasingly stringent fuel economy standards. They offer lots of torque for great off the line acceleration, don't suffer from the cost or range anxiety associated with electrics, and finding a place to refuel is generally easy. Diesels are most efficient on the highway, good for drivers who spend more time in the suburbs than in the city.

Those attributes have been more than enough to help consumers overlook the technology's downsides. The fuel is more expensive than gasoline, because it's more heavily taxed (by six cents a gallon at the federal level). Along with extra state taxes, diesel is currently $2.501 a gallon, versus a national average of $2.289 for regular gas, according to AAA.

Diesel engines produce more nitrogen oxide than their gas counterparts do, which is why VW is in so much trouble. And the cars are typically several thousand dollars more expensive than the equivalent model with a gas engine, because scrubbing the exhaust gas of nitrogen oxide and other particulates takes know-how and hardware.

Those cost curves will cross at some point, and hybrids will become the better deal, offering the same fuel economy for less money.

Hybrids offer comparable or better fuel economy, but are also more expensive than diesels. That will eventually change. Ever more stringent mileage and emissions standards mean diesel engines are getting more expensive to make, because they have to keep getting cleaner and more efficient, without losing the performance that attracts buyers. Matt DeLorenzo, managing editor of news for Kelley Blue Book, guesses VW cheated on the emissions standards for the same reason lazy students cheat: the tests are hard, and passing takes effort—time and money.

Meanwhile, the battery and motor technology that powers hybrids and electric cars is getting better and cheaper. "From a cost perspective, diesel doesn't seem like the way to go, especially as batteries get cheaper," says Dr. Daniel Sperling. Sperling is the founding director of the Institute of Transportation Studies at UC Davis, and sits on the California Air Resources Board.

Those cost curves will cross at some point, and hybrids will become the better deal, offering the same fuel economy for less money. If enough consumers are turned off by the stink of VW's scandal, the timeline for that role reversal could accelerate.

Clouding the Air

VW's cheating, of course, doesn't implicate diesels made by other manufacturers, or even all of its own offerings. If you don't trust Das Auto, you can buy a diesel-powered BMW 3 Series, Mercedes E-Class, Jeep Wrangler, or Chevy Cruze.

That said, the revelations have sparked concern about diesels made by other manufacturers. German car magazine Auto Bild reported the BMW X3 xDrive 20d was found to be 11 times over the legal NOx limit, a claim BMW denies.

Nearly all diesel cars use selective catalytic reduction, a chemical process that breaks NOx down into nitrogen and water. Part of that process includes adding urea to the mix. The super effective system can eliminate 70 to 90 percent of NOx emissions. The downside is that it adds complication to the system, and cost—$5,000 to $8,000 per car. And you need to periodically add the urea-based solution to your car to keep it working. The big “advance” from VW was the “clean diesel” technology that supposedly made the whole urea thing unnecessary on its smaller cars, like the Beetle, Jetta, and Audi A3—the very models being recalled because they don’t meet emissions standards under real-world driving conditions.

But VW's guilt could have an outsized impact here because the brand is so closely tied to the resurgence of diesel cars in the US in the past few years. The automaker has been heavily promoting the performance and fuel economy benefits of diesel for years now. The technology long been known for being loud, smelly, and dirty. VW's been busily fighting against that, with success. In 2006, according to the Diesel Technology Forum, just 13 percent of consumers looking for a car considered going diesel. That number's now at 40 percent.

It's a small market—about 3 percent of the total US passenger vehicle fleet, about 7-8 million cars—but one VW dominates. In 2013, it reported it accounted for more than 70 percent of "clean diesel" passenger vehicle sales.

All that good PR is spoiled now, and it's easy to see how VW's sins could cast doubt on its brethren. "They had finally overcome the legacy of the GM diesel lemons of the early 80s, and now it's back to where they started," Sperling says.

Hybrid-Friendly Policies

Helping accelerate the shift away from the internal combustion motor is the fact that American policy makers are very friendly to electrification, and rather harsh on diesel. The federal government has poured billions into helping automakers build electric cars. President Obama had hoped to put a million EVs on US roads by this year, though sales have been nowhere near that. Ten states, including California, have adopted zero emission vehicle mandates that require automakers to sell an increasing number of battery electric or hydrogen fuel cell vehicles.

Meanwhile, the government effectively penalizes diesel fuel by levying higher taxes, and emissions regulations are particularly challenging in the US. (Fun story: The independent study that tipped off the EPA to VW's cheating was designed to show how well the US regulates emissions.)

The Europeans are far friendlier, and offer more than cheaper fuel. "Air quality regulators went much easier on diesel than on gasoline," Sperling says, "because it was seen as protecting the automotive industry of Europe, who had invested in it." On the continent, roughly half the passenger cars are diesel powered, so it's no surprise it's VW, Mercedes, and BMW leading the charge to get Americans into it as well.

Diesel Fades Away

Diesel will likely remain popular in pickup trucks and SUVs, DeLorenzo says, where the extra torque really helps, and higher profit margins make it easier for automakers to recoup the costs of the extra hardware. It will still be the fuel of choice for rail and long haul trucking. But it's not going to play much role in the consumer vehicle market. "There was no significant talk about a major investment in diesel technology" at a recent Society of Automotive Engineers conference on powertrains, Sperling says,

Sperling predicts a slow increase in the sales of hybrids, plug-in hybrids, and fully electric cars—which now account for about three percent of US car sales—over the next 10 years. Charging will get easier as infrastructure spreads. Customers will get used to plugging in instead of pumping. Most importantly, the costs will drop.

Diesels ultimately will fade away, remembered as a stopgap solution en route to a cleaner, more electric future.